In the case of Sippchoice Limited v Commissioners for HMRC, the First-tier Tribunal of the tax courts has discharged a scheme administrator from the scheme sanction charge which HMRC had sought to impose, holding that the scheme administrator had reasonably believed there was no unauthorised payment.

A number of members of the SIPP in question had invested their funds in a company called Imperium Enterprises Limited ("Imperium"). Unbeknownst to the scheme administrator, Imperium was being used as part of a pension liberation scheme. Imperium made loans to a company known as "BOH" which subscribed in cash for new shares in a company known as "SKW" which made loans to the scheme members who had invested their SIPP funds in Imperial.

Before allowing members to invest in Imperium, the scheme administrator checked Imperium on the Companies House website, and also looked at Imperium's own website. One of the directors of Imperium gave his occupation as "solicitor", which reassured the scheme administrator. Imperium described itself as a property investment company, and the administrator concluded that the investment strategy described on Imperium's website appeared credible and genuine. A director of Imperium confirmed that it would not be making loans to scheme members or other individuals. As the number of members investing their SIPP funds in Imperium increased, the scheme administrator raised concerns with Imperium as to whether a pension liberation scheme was being operated, as was given misleading assurances by Imperium's representatives. When a member wrote to the scheme administrator directly and stated that he had only transferred his pension fund to the SIPP in order to secure a loan with SKW, the administrator stopped allowing any further investments in Imperium.

The Tribunal held that the scheme administrator's belief that there were no unauthorised payments being made was reasonable. The scheme administrator had been concerned to satisfy itself that no "simple" pension liberation scheme was in operation whereby Imperium or its debtors made loans to the scheme members. It had not appreciated that a more sophisticated pension liberation scheme was in operation. The Tribunal also held that there was nothing exceptional about the circumstances of the case that made it just and reasonable to impose a scheme sanction charge in any event.


The judgment in this case relates to events which occurred in 2010/11 when there was much less awareness of pensions liberation. Had the same events occurred in 2016, the court may well have reached a different conclusion.

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Jade Murray

Jade Murray

Partner, Pensions
United Kingdom

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